The impact of the pandemic has changed the operation of global cold chains. Many countries opened more facilities and put more emphasis on safety and adaptability to new circumstances, leading to a construction boom.
Rising costs due to lack of space
As many Vietnamese fruits are entering harvest season, the demand for cold storage systems is rising to a higher level. Nguyen Dinh Tung, general director of Vina T&T Co., Ltd., said that export businesses are in a difficult situation because the cold storage providers in Ho Chi Minh City and neighbouring provinces have run out of space. At the same time, rental prices for cold storage increased dramatically, while goods that could not be exported need even more space.
Demand greater than supply
Cold storage – as one part of a cold chain – is crucial for easily spoilable goods like produce. For instance, without cold storage the loss of fruits and vegetables can sometimes amount to up to 45 per cent, while up to 30 per cent of seafood spoils before ever reaching a buyer. Thus, some exporters had boldly invested in cold storage systems, but these also come with new challenges.
Vietnam’s cold storage development happened asynchronous to the growth of agricultural exports, which increase year by year. Despite the pandemic, the country’s export turnover of agricultural products in 2020 reached about $41.2 billion, but most items were raw and fresh.
Seafood remains greatest user of cold storage
Meanwhile, cold preservation systems are mainly applied for seafood, while other agricultural products only see a very low application level of these systems. According to a survey by CEL Consulting, in 2020, only 8.2 per cent of producers for the domestic market worked with proper cold chains, much lower than the two-thirds of exporters. However, the available cold storage in Vietnam does not meet the demand. Data from the Agency of Foreign Trade under the Ministry of Industry and Trade showed that the whole country had only 48 cold storages with a capacity of 600,000 pallets in late 2019, with about 80 per cent already filled at that time.
Establishing own cold storage is expensive
Some enterprises that purchase agricultural products for export have been forced to stop doing so and refrain from accepting any new orders. Because the establishment of a company’s own cold storage would be very costly, businesses mainly rent them and bear the price offered by the lessor.
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